Grape prices heading higher

San Joaquin County grape growers are seeing something new in their vineyards this year, or at least something they haven't seen for the past decade: a decent return on their investment.

Since 2000, prices in the Lodi growing district have averaged less than $500 a ton and were bobbing around $400 a ton from 2002 through 2007.

At those levels, farmers may be able to cover their annual operating costs, but in many cases not. Even so, the returns fall far short of meeting capital investments in land, planting a vineyard, equipment and more, University of California cost studies show.

Last year, however, average Lodi district grape prices rose to more than $560 a ton, and this year's are even higher.

It's a statewide trend, said Nat DiBuduo, president and chief executive of Allied Grape Growers, a Fresno-based cooperative that helps its members negotiate sales to wineries.

"Prices are now close to, or at, what many growers would describe as sustainable for business," he recently reported.

Still, many grape producers have a hangover of debt they took on to survive through the decade.

"Although cash flow may be improved for the present time, that doesn't mean the overall financial position of those growers is any healthier than it was 10 years ago," DiBuduo said.

Winegrape prices have strengthened throughout the state.

DiBuduo said Lodi area cabernet sauvignon is fetching anywhere from $500 to $800 a ton, chardonnay $550 to $750 per ton, merlot ranges from $600 to $750, and the district's signature old vine zinfandel can command $1,200 or more.

Kyle Lerner, a Lodi grower and co-owner of Harney Lane Winery, said the price turnaround has been "an almost overnight upswing."

"It's especially nice to have grape buyers taking you out to lunch trying to buy your grapes," he said. "We've been buying their lunch for a lot of years.

"Wineries finally opened their eyes and realized that demand by volume has been continuing to increase, while planting has been nonexistent for the past 10 years."

Ed Van Diemen, president of the Lodi District Grape Growers Association, said he's encouraged by new vineyards plantings, most under long-term contracts with wineries.

"What I'm seeing is ... people are planting again, so they're figuring it can pencil out," he said.

Both growers report seeing healthy growth in their vineyards, as well, with small bunches of small green grapes hanging under the leafy canopies.

The experts said this year's crop looks to be of average size, perhaps slightly above average, in most vineyards.

The main worry for farmers this year may be finding workers to help bring in the fall harvest.

"My biggest concern is absolutely going to be labor, especially for the zinfandel, just because that is going to be picked by hand," Van Diemen said.

Labor shortages were widely reported in the just-concluded cherry harvest, which is very labor intensive as that fruit must be hand-picked. Growers found themselves bidding against one another to secure needed work crews.

While most grapes in the Lodi area are harvested by machine, many still are picked by hand, in particular the old vine zinfandel, which is grown as individual small bushes rather than strung along a wire trellis.

"That's going to be one of the biggest issues facing us this year," Van Diemen said.

Immigration policies aimed at stemming illegal entry, without provisions for temporary entry for needed farm labor, is certainly part of the blame, Lerner added.

"The powers that be ... don't really understand what they're doing."

Still, strong grape prices help assure a long-term future for the San Joaquin County winegrape industry, one of the area's top cash crops.

The county Agricultural Commissioner's Office puts an estimated value of $249 million on the 2010 grape crop, according to the latest report available.

DiBuduo said the wineries, too, should be able to keep rolling along despite higher fruit prices.

"I'm not trying to take advantage of the situation," he said. "I am here to try to get a proper price for my growers that will allow them to make a profit on their investments. And hopefully that price is at a level where the wineries can continue to make wine for their programs and sustain those programs."